A $147m budget saving missed: income management has failed

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Eva Cox does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

The expensive and extensive government-funded evaluation of income management in the Northern Territory clearly failed to find it worth ongoing funding. Note the following significant findings in the summary report of the final evaluation report on NT income management programs:

The evaluation could not find any substantive evidence of the program having significant changes relative to its key policy objectives, including changing people’s behaviours.

More general measures of wellbeing at the community level show no evidence of improvement, including for children.

The evaluation found that, rather than building capacity and independence, for many the program has acted to make people more dependent on welfare.

Yet the 2015-16 budget has not only included a two-year extension of the services to 25,000 recipients, but signals more expansion of the basic concept. This makes no sense as most forms of income management fail to show positive outcomes, despite some individuals, mainly voluntary participants, claiming income management has benefited them.

The included funding is for new technology and commercial involvement in the future program, which suggests the Andrew “Twiggy” Forrest version of a cashless welfare card is the next step. Why would the Forrest version offer better outcomes, apart from cutting administration costs by removing Centrelink?

The announcement below fails to acknowledge there are any questions about benefits of the program. The budget statement claims:

Income Management 2015 Budget

Income management is a tool that helps people better budget their welfare payments and ensures they are getting the basic essentials of life such as food, housing, electricity and education.

What was announced in the 2015 budget?

Income management will continue for another two years in all locations where it currently operates, with possible expansion to four new communities. This $144.6 million investment will build on the positive impacts of income management; giving participants more control of their welfare money, improving family stability, reducing stress and financial hardship. It will also give Government time to fully test alternative approaches to welfare payments quarantining.

Returning to the evaluation report, there are further clear statements, backed by data in the body of the report by the Social Policy Research Centre at UNSW, that do not recommend continuing the program in any of its current forms:

Summarising the impact

Taking the results as a whole, the conclusion is that there is no evidence of any consistent positive impacts on problematic behaviours related to alcohol, drugs, gambling, and financial harassment, in the extent to which financial hardships and stresses are experienced – for example, running out of food, not being able to pay bills, or on community level outcomes such as children not being looked after properly, school attendance, drinking, and financial harassment. (p.307)

Despite the magnitude of the program the evaluation does not find any consistent evidence of income management having a significant systematic positive impact. (p.317)

Data on spending point to continued major problems of diet and poor levels of fruit and vegetable consumption, in particular for Indigenous people living in remote communities. There is no evidence of income management having resulted in changes in spending or consumption, including on alcohol, tobacco, fresh fruit and vegetables. (p.317)

Given the report was delivered to the government last September and released publicly in December, it is puzzling that there has been no acknowledgement of the flaws. In late March, the government announced that welfare recipients would be given cashless cards to stop them spending money on alcohol and drugs in a bid to combat violence against women and children. Parliamentary Secretary to the Prime Minister Alan Tudge said the government was planning trials of the cards “in a small number” of places, which were yet to be decided, later this year.

And now it is in the budget. This decision clearly ignores the findings of the evaluation report, which seriously undermine any government claims that quarantining incomes is effective in changing behaviour or that its new card will affect spending positively and reduce drinking. The report does not recommend continuing the program in any of its current forms.

Prejudice makes it easier to ignore evidence

The question arises: why does this particular policy change receive so little attention or objections? Despite the threat that controlling income may well alter the basis for general income support, the possibilities stay beneath the public debate radar. Few in the welfare sector have raised objections or questions.

One can only assume an element of racial and wider prejudice is operating, as the original and many ongoing recipients have been Indigenous. Income management started as part of the Howard government’s NT Emergency Response to a child sexual abuse report.

Originally, the income management program was targeted at all Commonwealth payment recipients in 72 Indigenous communities, controlling 50% of their spending. It required suspending the Racial Discrimination Act. There was no explanation as to how financial controls would fix child abuse.

When the ALP took office some months later, it expanded the numbers and set up a review. Despite the Yu report raising some questions and doubts, the new government extended the scheme to the rest of the NT. It was de-racialised but still covers mostly Indigenous recipients in the NT, with smaller mainly non-Indigenous and Indigenous pilots elsewhere.

Now, eight years on and despite all the evidence to the contrary, the budget papers state clearly:

The Government is investing $147 million to deliver more streamlined and cost-effective income management. Around 25,000 people will continue to benefit from this programme designed to support vulnerable Australians.

Why? How about some serious economic rationality, both to save taxpayers’ money and improve social well-being?